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Healthcare companies face varied customers, market dynamics and regulatory demands. Research for new, improved medicines for diseases, establishing hospitals and providing health care has always made the Health Care sector one that is emotionally close to the Firm.  SRKA & COMPANY works closely with healthcare companies to help establish best practices ensuring delivery of better value for patients by innovating constantly to reduce the costs and complexity of organizational processes.

We serve:

  • Hospitals
  • Biotechnology Companies
  • Health Clinics
  • Pharmaceutical Companies

Major Fiscal Incentives for Health Care Sector

Various fiscal incentives are provided by the Government of India for promoting Health Care Sector in economy  Some of the key incentives are outlined below:

Income Tax

Healthcare sector such as Section 10(23C), Section 44A, Section 44AB, Section 11, Section 12, Section 35AD:

10(23C):-

In computing the total income of a previous year of any person, any income falling within any of the following clauses relating to such assessee (Private Hospital etc.) shall not be included if income received by any person on behalf of:-

  • any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, and which is wholly or substantially financed by the Government.
  • any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, if the aggregate annual receipts of such hospital or institution do not exceed the amount of annual receipts as may be prescribed;
  • any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness or for the reception and treatment of persons during convalescence or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiac) or sub-clause (iiiae) and which may be approved by the prescribed authority

Section 11:-

Section 11 deals with the exemption of income from property held in trust/institution or other legal obligation for religious/charitable purpose wholly or in part and voluntary contributions.

11(1)(a)income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India and where any such income is accumulated or set apart for application to such purposes in India to the extent to which the income so accumulated or set apart is not in excess of 15% of the income from such property
11(1)(b)income derived from property held under trust in part only for such purposes, the trust having been created before the commencement of this Act to the extent to which such income is applied to such purposes in India and where any such income is finally set apart for application to such purposes in India to the extent to which the income so set apart is not in excess of 15% of the income from such property

Section 12:-

Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly.

(2) The value of any services, being medical or educational services, made available by any charitable or religious trust running a hospital or medical institution or an educational institution, to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purposes during the previous year in which such services are so provided and shall be chargeable to income-tax notwithstanding the provisions of sub-section (1) of section 11.

Section 35AD:

An assessee shall be allowed a deduction in respect of the whole of any expenditure of capital nature incurred, wholly and exclusively, for the purposes of any specified business carried on by him during the previous year in which such expenditure is incurred by him : Provided that the expenditure incurred, wholly and exclusively, for the purposes of any specified business, shall be allowed at the specified rate as deduction during the previous year in which he commences operations of his specified business, if— (a) the expenditure is incurred prior to the commencement of its operations; and (b) the amount is capitalized in the books of account of the assessee on the date of commencement of its operations.

This provision is admissible for specified business in the nature of building and operating a new hospital with at least 100 beds for patients. Further the capital expenditure shall not include acquisition of land or goodwill or financial instrument.

GST on Health Care:-

Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 has exempted health care services vide Sr. No. 74 which is reproduced as under:

Services by way of:

(a) “HealthcareServices by a Clinical Establishment or Authorized Medical Practitioner or Para medics;

(b) Services provided by way of transportation of a Patient in an ambulance, other than those specified in (a) above

Sr. No. 46: Services by a veterinary clinic in relation to health care of animals or birds. Sr. No. 73:       Services provided by the cord blood banks by way of preservation of stem cells or any other service in relation to such preservation.

Sr. No. 74: Transportation of Patients in Ambulance

 

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